(471 kb)
(471 kb)
In 1999, many Canadians were introduced to the buzzword 'demutualization' when several mutual life insurance companies changed their structure to become stock companies.
The organization of mutual life insurance companies, wherein policyholders each own a piece of the company, much like a co-operative, has restricted the companies from raising capital from outside investors. Recent changes in federal legislation allow companies to demutualize and issue shares. Many have already listed on stock exchanges and raised capital through public offerings.
This demutualization has also occurred in the United Kingdom, the United States
and Australia. Participating policyholders have benefited from demutualization
by replacing their accumulated dividends with publicly traded shares in the
new company. About $10 billion of new shares have been transferred to more than
two million Canadian policyholders. Some have sold their shares, while others
have kept them as an investment.